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The Associated Press/HONG KONG
By SAM CAGE
Associated Press Writer

U.S., EU trade criticism at WTO meeting


DEC. 14 1:14 P.M. ET The United States and European Union traded criticism at the World Trade Organization meeting Wednesday even as they urged fellow delegates to break a deadlock in global trade liberalization talks.

U.S. Trade Representative Rob Portman said the negotiations would not move unless the EU further opens its markets to agricultural imports, while Peter Mandelson, his European counterpart, criticized other rich countries for their objections to a package granting the world's poorest countries special trade privileges.

Two days into a six-day WTO meeting, ministers gave a grim assessment, saying there had been no progress on resolving an impasse over how much to cut rich countries' farm aid, which developing nations say limit their agricultural exports to wealthy markets.

"Unless the EU moves on market access, I don't see anyone else moving," Portman told reporters.
But EU trade chief Mandelson and French Trade Minister Christine Lagarde defended the 25-nation bloc's position. Mandelson said he won't propose further concessions beyond the average 46 percent cut in farm tariffs the EU already has on the table until negotiation partners, particularly developing countries like Brazil, offer to open up their industrial and services markets to foreign competition.

The release of a report in Washington on Wednesday showing that the U.S. trade deficit unexpectedly rose 4.4 percent in October to an all-time high of $68.9 billion adds yet another complication to the entire Doha round of trade negotiations, which negotiators aim to bring to a conclusive agreement by the end of next year.

Before it could take effect in the United States, any WTO agreement would have to win approval by both the House and the Senate under a fast-track procedure that requires an up or down vote without amendments. But a widening trade deficit would leave the pact open to attack by opponents because it would lower U.S. barriers to imports.

For a second day, dozens of South Korean farmers clashed with police outside the harbor-front conference center. Protesters punched, kicked and tried to break through a police line, and security forces fought back with pepper spray, clubs and shields.

The farmers, dressed in matching red vests and chanting, "Down, down WTO," have been among the most militant protesters. They claim an eventual global agreement cutting import barriers would wipe out the South Korean rice market and their livelihoods.

As they concluded their protest, the Koreans picked up scraps of torn signs, plastic bottles and other protest litter. They put it in a neat pile for street sweepers to clean up.

In another protest, about 20 activists wearing Santa Claus hats and holding up papers with the names of major companies sang "Our World is Not for Sale" to the tune of "Jingle Bells" in the WTO media center.

Inside the convention center, Portman urged fellow delegates not to pass on a "once-in-a-generation opportunity" to boost the global economy and alleviate poverty. "Either we move forward or we risk moving backward toward protectionism that will stunt economic growth and harm the developing world the most," he said in a speech.

The Hong Kong meeting was meant to produce an outline for final agreement on cutting trade barriers in agriculture, manufacturing and services, but the stalemate over farm trade has made that highly unlikely.

Mandelson warned delegates that being too preoccupied with agriculture could torpedo the entire trade negotiations. And he hit out at other rich countries for their objections to a proposal to give duty-free and quota-free trade access to world markets for all products produced in the poorest nations -- a measure that seemed to garner broad support among representatives of the WTO's 149 member nations just a day earlier.

The proposal was meant to help 32 WTO members with a per capita income of less than $750 a year. "We need to deliver this development package," Mandelson said.

He declined to single out which countries had raised objections, but Zambian Trade Minister Deepak Patel said the United States and Japan had reservations about the proposal. Washington denied the claim, and Shoichi Nakagawa, Tokyo's minister of agriculture, forestry and fisheries, said that while Japan was not rejecting the overall package, it did draw the line at rice.

"In agriculture, there are things we must protect and those are sensitive products," Nakagawa said. "Rice is of course included among sensitive products for Japan."

Portman also announced that the United States will give $2.7 billion in grants by 2010 to least-developed countries in so-called "aid-for-trade" -- double what it contributed last year -- in an attempt "to help make this ministerial meeting a success."

That money, meant to help poor countries build trade infrastructure and other services to better compete in world markets, must accompany substantial progress in slashing trade barriers across a wide array of sectors, he said. The EU already announced a boost to its annual contribution Tuesday.

African cotton exporters made a plea to immediately eliminate export subsidies given to cotton farmers in the United States and other wealthy nations, blaming the aid for a slump in world cotton prices that driven many poor farmers out of work.

U.S. support for cotton growers includes about $1.7 billion annually in payments to farmers as well as special marketing programs that keep U.S. cotton competitive on the world market. The programs are effective: The U.S. is world's biggest cotton exporter.

Cotton represents some 30 percent of export earnings for countries in West and Central Africa, and at least 10 million people depend on cotton for livelihood. Prices of the crop have remained depressed for almost five years, causing Africans an annual loss of $450 million in income, according to Samuel Amehou, the WTO ambassador of Benin, another key cotton exporter from Africa.

The WTO ruled earlier this year against U.S. cotton export programs in a trade dispute with Brazil. The Bush administration has proposed eliminating the programs in question to comply with the WTO ruling and avoid retaliation from Brazil, but analysts say Congress is not likely to address the program until lawmakers begin writing a new farm bill next year.

The programs are the "Step-2" program, which compensates exporters and domestic mills for buying higher-priced U.S. cotton, and export guarantee programs.